The future of NHS outsourcing

Posted On: 
19th February 2018

Dods Monitoring's Rosie Lythgoe-Cheetham writes about outsourcing within the NHS following the collapse of Carillion, and notes that the public, NHS staff and politicians have now begun to wonder how many more weaknesses lie just beneath the surface of this model.


Following the Carillion collapse scandal, outsourcing has been making headlines in recent months. This has led many to question exactly how outsourcing really works within the National Health Service and whether contracting with private companies really is the best use of taxpayers’ money. Could this widespread use of private companies within the publicly owned NHS be the true root cause of today’s massive NHS crisis? Opinion may be mixed on the topic but it’s safe to say that Carillion has been a catalyst for greater transparency in NHS procurement and management.

Outsourcing has long been a popular way to alleviate funding issues and staff shortages within the National Health Service but in recent years, its use has increased dramatically. According to the British Medical journal, spending on private healthcare providers within the NHS rose from 2.8% in 2006-07 to 6.1% in 2013-14. Most outsourcing is focussed on non-medical areas of the health services, such as IT, finance and construction. But as time goes by, healthcare providers themselves are less likely to be sourced in-house.

NHS outsourcing was first introduced as a way to increase patient choice within the health service. In theory, competition between providers who bid for NHS contracts would generate higher quality care. As it stands, there has been no large-scale privatisation, as outsourcing is restricted to small and specific contracts. Currently, “about 10 per cent of NHS spend on health services is on non-NHS providers which includes for-profit companies, local authorities, social enterprises, charities and community interest companies” according to the King’s Fund.

Accountable care organisations (ACOs) are a new NHS initiative which many see as the first step towards an American-style private system in the UK. However, according to Professor Sir Bruce Keogh, NHS England’s national medical director; “Rather than the Trojan horse for privatisation that some critics may fear, this is a bold attempt to unite a fractured system and stop people being pushed from pillar to post”.

Born in Obama’s America, ACOs were formed in order to reduce the high costs incurred by his big healthcare reforms. In the UK, the Government has decided to adopt this arrangement too. In doing so, all public and private health and care providers would be joined up under one organisation and therefore make the most of precious financial, staff and skill resources. With a rapidly ageing population, many argue that reforms of this kind are inevitable and the only way to cope with the current adult social care crisis. Each ACO would be held fully accountable for quality of care provided and intends to unify private contracts with the public NHS.

Billed by the Department of Health and Social Care as a way to create ‘joined-up’ care provision between different health and care organisations in the eight regions where it’s being implemented. However, following widespread concern and critique, the Government ran two consultations on ACOs, leading to delays for the project all over the country. Many prominent figures in the healthcare industry have criticised the consultation itself, wondering what legislation changes Health and Social Care Secretary Jeremy Hunt could be making behind closed doors, allowing the ACOs to quietly begin operation despite widespread concern amongst experts and those working within the NHS itself.

The now liquidated Carillion holds several contracts with the NHS, mostly in catering, car-parking and estates. Following the company’s collapse, the precarious nature of outsourcing within our health service has been painfully exposed. Unlike publicly owned companies which do not serve to make profit, the risk-taking nature of big-business contractors like Carillion leaves them vulnerable to collapse. As a direct result, big hospital building projects such as the Midland Metropolitan Hospital in Birmingham and the Royal Liverpool University Hospital have been delayed. Unsurprisingly, the public, NHS staff and politicians have begun to wonder how many more weaknesses lie just beneath the surface.